With the Federal Reserve interest rate decision only hours away, the US Dollar firmed broadly. Expectations among the analysts and economists surveyed indicate that the Fed is likely to raise the benchmark lending rate to 1.25%, a 25 basis points increase from the current 1.0%. The press conference which follows the rate announcement will also be scrutinized for additional clues as to the likelihood of more rate adjustments in the future, with the next later in the year. Janet Yellen, the head of the Federal Reserve Bank, will preside over the press conference.
As reported at 11:11 am (BST) in London, the GBP/USD was trading at $1.27, a gain of 0.13% and off the session peak of $1.2797 while the trough was set at $1.2724. The EUR/USD was down 0.05% to trade at $1.1204; the pair earlier hit a low of $1.12021 while the peak was at $1.12261. The USD/JPY was up 0.18% to trade at 110.28 Yen; the day’s low was at 109.949 Yen while the high was at 110.325 Yen.
Key Data Also Looms
In addition to the Fed’s policy decision, markets will also be focusing on the latest economic data which has market moving potential. Personal inflation data and retail sales for May will be released in advance of the Fed’s news. Analysts are forecasting that retail sales will fall to 0.1% in May from 0.4% while May’s CPI will drop to 2.0% (year-over-year) from April’s 2.2% with core inflation (which strips out volatile components) will remain flat at 1.9%. Any disappointment in the figures could temper the likely Dollar rally as a result of the expected Fed decision.
